Here’s Paul Krugman:
That said, as Neil Irwin points out in the linked article, it’s not clear how much difference it would have made if the Fed had grasped the scale of the danger back in 2007. The big errors came later, after the depth of the crisis was apparent to all, and they came mainly in fiscal and housing policy, not monetary policy.
I think the Fed could have and should have prevented the big fall in AD. Krugman doesn’t agree. I’m looking at you Bob and Kevin.
In case it’s still not clear, obviously if the Fed could have and should have prevented the big fall in AD, then not doing so was a very, very, very “big error.”